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Earned income. Earned income

Line 6

includes wages, tips, and other

Line 5 Worksheet #1

payments received for personal

If the parent filed a joint return, enter

Keep for Your Records

services performed. Generally, it is the

the taxable income shown on that

total of the amounts reported on Form

return even if the parent’s spouse is not

1040, lines 7, 12, and 18; Form 1040A,

the child’s parent.

Use this worksheet only if line 2 of the

line 7; or Form 1040NR, lines 8, 13,

child’s Form 8615 is $1,700 and lines 3 and

and 19.

If the parent files Form 2555 or

5 are the same amount.

2555-EZ, enter the amount from line 7

Earned income also includes any

of the parent’s Foreign Earned Income

taxable distribution from a qualified

1. Enter the child’s qualified

Tax Worksheet (in the Form 1040

disability trust. A qualified disability trust

dividends . . . . . . . . . . . . . . .

instructions), instead of the parent’s

is any nongrantor trust:

2. Enter the child’s net capital

taxable income.

1. Described in 42 U.S.C.

gain . . . . . . . . . . . . . . . . . .

1396p(c)(2)(B)(iv) and established

3. Enter the amount from the

solely for the benefit of an individual

Line 8

child’s Form 8615, line 1 . . . .

under 65 years of age who is disabled,

Enter on this line the total of lines 5, 6,

and

4. Divide line 1 by line 3. Enter

and 7. You must determine the amount

2. All the beneficiaries of which are

the result as a decimal

of net capital gain and qualified

determined by the Commissioner of

(rounded to at least three

dividends included on this line before

Social Security to have been disabled

places). Do not enter more

completing line 9.

for some part of the tax year within the

than 1.000 . . . . . . . . . . . . . .

meaning of 42 U.S.C. 1382c(a)(3).

5. Divide line 2 by line 3. Enter

Net capital gain. Net capital gain is

the result as a decimal

the smaller of the gain, if any, on

A trust will not fail to meet (2) above

(rounded to at least three

Schedule D, line 15, or the gain, if any,

just because the trust’s corpus may

places). Do not enter more

on Schedule D, line 16. If Schedule D is

revert to a person who is not disabled

than 1.000 . . . . . . . . . . . . . .

not required, it is the amount on line 13

after the trust ceases to have any

6. Multiply $1,700 by line 4 . . . .

of Form 1040, line 10 of Form 1040A,

disabled beneficiaries.

7. Multiply $1,700 by line 5 . . . .

or line 14 of Form 1040NR.

8. Qualified dividends on Form

Child’s Investment Income

Qualified dividends. Qualified

8615, line 5. Subtract line 6

Worksheet — Line 1

from line 1 (but do not enter

dividends are those dividends reported

Keep for Your Records

less than zero or more than

on line 9b of Form 1040 or Form 1040A

the amount on Form 8615,

1. Enter the amount from the

or line 10b of Form 1040NR.

line 5) . . . . . . . . . . . . . . . . .

child’s Form 1040, line 22;

Form 1040A, line 15; or Form

Net capital gain and qualified

9. Net capital gain on Form

1040NR, line 23, whichever

dividends on line 8. If neither the

8615, line 5. Subtract line 7

applies . . . . . . . . . . . . . . . . .

child, nor the parent, nor any other child

from line 2 (but do not enter

2. Enter the child’s earned

has net capital gain, the net capital gain

less than zero or more than

income (defined above) plus

the excess of Form 8615, line

on line 8 is zero.

the amount of any penalty on

5, over line 8 of this

early withdrawal of savings

If neither the child, nor the parent,

worksheet) . . . . . . . . . . . . . .

from the child’s Form 1040, line

nor any other child has qualified

30; Form 1040A, line 16; or

dividends, the amount of qualified

Form 1040NR, line 29,

dividends on line 8 is zero.

Line 5 Worksheet #2

whichever applies . . . . . . . . .

Keep for Your Records

3. Subtract line 2 from line 1.

If the child, parent, or any other child

Enter the result here and on

has net capital gain, figure the amount

Form 8615, line 1 . . . . . . . . . .

of net capital gain included on line 8 by

Use this worksheet only if line 2 of the

adding together the net capital gain

child’s Form 8615 is more than $1,700 and

amounts included on lines 5, 6, and 7.

Line 2

lines 3 and 5 are the same amount.

If the child, parent, or any other child

If the child itemized deductions, enter

has qualified dividends, figure the

1. Enter the child’s qualified

the larger of:

amount of qualified dividends included

•

dividends . . . . . . . . . . . . . . .

$1,700, or

on line 8 by adding together the

•

$850 plus the portion of the amount

2. Enter the child’s net capital

qualified dividend amounts included on

on Schedule A (Form 1040), line 28 (or

gain . . . . . . . . . . . . . . . . . .

lines 5, 6, and 7. Use the following

Form 1040NR, Schedule A, line 17),

discussions to find these amounts.

3. Add lines 1 and 2 . . . . . . . . .

that is directly connected with the

production of the investment income on

4. Divide line 1 by line 3. Enter

Net capital gain or qualified

Form 8615, line 1.

the result as a decimal

dividends on line 5. If the child has a

(rounded to at least three

net capital gain or qualified dividends,

places) . . . . . . . . . . . . . . . .

Line 4

use the appropriate Line 5 Worksheet

on this page or page 3 to find the

5. Enter the child’s itemized

If the child files Form 2555 or 2555-EZ

amount of each included on line 5.

deductions directly connected

to claim the foreign earned income

with the production of the

These worksheets are needed to adjust

exclusion or housing exclusion, enter

child’s qualified dividends or

the child’s net capital gain and qualified

the amount from line 7 of the child’s

net capital gain . . . . . . . . . . .

dividends by the appropriate allocated

Foreign Earned Income Tax Worksheet

amount of the child’s deductions.

(in the Form 1040 instructions), instead

6. Multiply line 4 by line 5 . . . . .

of the child’s taxable income.

-2-

Instructions For Form 8615 - Tax For Children Under Age 18 With Investment Income Of More Than 1,700 - Internal Revenue Service - 2006 Page 2

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